(a) Customs Act (IV of 1969)‑‑‑

‑‑‑‑S.32‑‑‑Scope and application of S.32, Customs Act, 1969‑‑ Provisions of S.32, Customs Act, 1969 relate to three different and distinct categories of short levy or refund etc., i.e. in relation to any declaration or statement which is false in any material particular; where there is some collusion and where there is any inadvertence, error or misconstruction on the part of the Department.  

(b) Customs Act (IV of 1969)‑‑‑

‑‑‑S.32(2)(3)‑‑‑S.R.O. 530(I)/90, dated 7‑6‑1990‑‑‑Custom Tariff Section Notes V to XVI‑‑‑Constitution of Pakistan (1973), Art.199‑‑ Constitutional petition‑‑‑Short levy of Customs Duty‑‑‑Show‑cause notice under S.32(2)(3), of Customs Act, 1969‑‑‑Limitation‑‑‑Department had not alleged that the short levy was on account of a ‑misstatement or misdeclaration made by the importer in a certificate or other document or was on account of any statement which was false in any material particular or on account of ‑some collusion‑‑‑Show‑cause notice simply stated that the import duties in respect of the consignment, were found to have been short levied because the assessment should have been correctly made under PCT Heading 9010.1090 chargeable to the Customs Duty @ 50% and sales tax @ 12.50% instead of "free" which clearly indicated that it was a result of inadvertence, error or misconstruction on the part of the Customs Department and was, therefore, not due to misdeclaration or misstatement made or a false document submitted, by the importer‑‑ All the documents relating to the import were presented to the Department which ordered clearance of the goods‑‑‑Inadvertence, error or misconception on ,the part of Department in clearing the goods exempt from duty was evident on the relevant official record wherein it was stated on post importation scrutiny of the document it was detected that the subject goods did not qualify for the exemption .under S.R.O. 530(I)/90 dated 7‑6‑1990 viz. definite in Section Note V to Section XVI of the Customs Tariff‑‑‑Show‑cause notice thus nowhere mentioned of a misstatement, false .statement or any collusion on the part of the importer which resulted in short levy of the Custom Authorities‑‑‑Show‑cause notice, in circumstances, was not covered by S.32(2), Customs Act, 1969 but was covered by S.32(3) of the said Act which at the relevant time required the Customs Authorities to issue a show‑cause notice within six months of the relevant date‑‑‑Notices, in the present case, having been issued after more than 15 months of the expiry of the relevant date was barred by limitation and thus was without lawful authority and of no legal effect and was accordingly set aside by the High Court.

Zamiruddin Ahmed for Petitioner.

Jawaid Farooqui for Respondents Nos.2 and 3.

S. Ziauddin Nasir, Standing Counsel.

Date of hearing: 13th September, 2002.

JUDGMENT

S. AHMED SARWANA, J.‑‑‑Rose Colour Laboratories and Nayab No.1 (Pvt.) Limited (petitioner herein), as stated in the petition, is engaged in colour photo processing industry at Mirpur, Azad Kashmir. In 1990 they imported apparatus and equipments for installation in their laboratories which, according to them was exempted from duty and tax under S R.O. 530(I)/90, dated 7‑6‑1990. The Assistant Collector of Customs Appraisement, Group VII (respondent No.3) cleared the consignment free of Customs Duty and Tax under Bill of Entry Cash No.576, dated 28‑9‑1990. In accordance with the requirements of the S.R.O., the petitioner furnished an Indemnity Bond which was discharged subsequently on production of a Certificate from the Deputy Collector of Customs and Central Excise of the Area of the effect that the machinery as declared to the Customs hart been duly installed of the area specified in the Table annexed with the S.R.O. It is further alleged that the petitioner imported another machine on 13‑11‑1991 and flied a Bill of Entry for its clearance claiming exemption under S.R.O, 1284(I)/90, dated 13‑12‑1990 The respondents declined to grant clearance under the aforesaid Exemption ad when the petitioner presented a copy of the Bill of Entry Cash No.576, dated 27‑9‑1990 as a precedent, the Assistant Collector 'issued Notice, dated 5‑1‑1992 demanding a sum of Rs.607,730 on account of Customs Duty :and Sales Tax in respect of the machinery imported in 1990 on the ground .that the earlier release of the said consignment was Short Assessed and the petitioner was asked to show cause under section 32(2) and (3) of the Customs Act. 1969, why the said amount of Rs.607,730 short levied should not be paid by the petitioner. The petitioner replied to the said show‑cause notice. After hearing the petitioner, respondent No.3 decided the case by Order‑in‑Original No. S.I/MISC/LAP/209/90‑VII, dated 5‑5‑1992 rejecting the plea of the petitioner and called upon them to immediately deposit the short levied amount.

During the course of the proceedings before the Assistant Collector, the petitioner wrote to the Chairman, Central Board of Revenue (respondent No.1) for extending the benefit of S.R.O. 1284(I)/90, dated 13‑12‑1990 on the ground that the machine imported was not only a photo processing machine but was also a printing machine capable of printing greeting cards, Eid Cards and visiting cards at a very fast speed. However, respondent No.1 by letter, dated 15‑2‑1992 declined the request. The petitioner alleges that in view of the refusal by respondent No. 1 to accede to their request they filed the present petition challenging the show‑cause notice, dated 5‑1‑1992 and the Order‑in- Original, dated 5‑5‑1992 passed by respondent No.3.

We have heard Mr. Zamiraddin Ahmed, learned Advocate for the petitioner and Mr. Jawaid Farooqui. Advocate for Respondents Nos.2 and 3.

The main argument advanced by Mr. Zamiruddin, learned counsel for the petitioner were that the show‑cause notice, dated 5‑1‑1992 under section 32 was barred by limitation as the period provided for issuing a show‑cause notice for short levy by reason of inadvertence, error or misconstruction was six months from the date of clearance of goods or assessment while the show‑cause notice in the present case had been issued after more than 15 months and that the notice was also un‑clear and did not specify that the short levy was the result of any misdeclaration, misstatement or collusion by the petitioner. The relevant provision of section 32 of the Customs Act, 1969 as it stood at the time of filing of the Bill of. Entry by the petitioner reads as follows:

"32. Untrue statement, error, etc.‑‑‑(1) If any person, in connection with any matter of customs,‑‑‑

(a) makes or signs or causes to be made oar signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or

(b) makes any statement in answer to any question put to him by an officer of Customs which he is required by or under this Act to answer.

knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section.

(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short‑levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date, requiring him to show cause why he should not pay the amount specified in the notice.

(3) Where, by reason of any inadvertence, error, or misconstruction, any duty or charge has not been levied or has been short‑levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within six months of the relevant date requiring hurt to show‑cause why he should not pay the amount specified in the notice.

(4) ....."

A perusal of the above provisions indicates that they relate to three different and distinct categories of short levy or refund etc. The first is in relation to any declaration or statement which is false in any material particular, the second where there is some collusion and the third where there is any inadvertence, error or misconstruction on the part of the department.

To appreciate the arguments of Mr. Zamir, it would he appropriate to reproduce here the relevant portion of the show‑cause notice, dated 5‑1‑1992 issued by the respondent No.3, which reads as follows:‑‑‑

"SUBJECT: SHORT RECOVERY OF RS. 607.730 DESCRIPTION OF GOODS LAB APPARATUS AND EQUIPMENT FOR SS `OCEAN STRENGTH" IGM No.1783 OF 1990, DATED 20‑9‑1990 INDEX NO. 93 CASH NO.B/EREG: N0.576/27‑9‑1990

The import duties in respect of the above consignment are found to have been short‑levied because of the following reasons:‑‑‑

The assessment should have been correctly made under P.C.T. Heading 9010.1090 chargeable to the Customs Duty @ 50% and Sales Tax @ 12.5 % instead of Free.

In exercise of the power vested in me under subsections (2) and (3) of section 32 of the Customs Act, 1969, I hereby serve you with a show‑cause notice to why the amount of Rs.607.730 short‑levied should not be paid by you. The reply should reach the undersigned within fifteen days from the date of this demand.

Hearing in this case has been fixed for 18‑1‑1992 at 10‑30 hours on which date the importers their accredited representative or duly briefed lawyer may appear to represent the case..."

From the reading of the above show‑cause notice, it is clear that respondent No.3 has not alleged that the short levy was on account of a misstatement or misdeclaration made by the petitioner in a certificate or other document or was of account of any statement which was false in any material particular or an account of some collusion. The show‑cause notice simply states that the import duties in respect of the consignment were found to have been short‑levied because the assessment should have been correctly made under PCT Heading 9010.1090 chargeable to the Customs Duty @ 50% and Sales Tax at 12.5% instead of Free which clearly indicates that it was a result of inadvertence, error or misconstruction on the part of the Customs and was, therefore, not due to misdeclaration or misstatement made or a false document submitted by the petitioner. All documents relating to the import were presented to respondent No.3 alongwith the claim that the goods were exempted under the said S.R.O. which apparently after scrutiny were accepted by respondent No.3 who ordered clearance of the goods. The inadvertence, error or misconception on the part of respondent No.3 in clearing the goods exempt from duty is evident from paragraph 2 of the Order‑in -Original, wherein he has stated "On post importation scrutiny of the document it was detected that the subject goods did not qualify for the exemption under the aforesaid S.R.O.'s because these do not answer to the expression `machinery' referred to in S.R.O.'s vis‑a‑vis definition in section Note 5 to section XVI of the Custom Tariff." Mr. Jawaid Farooqui, learned counsel for the respondents vehemently argued that filing of the Bill of Entry and claiming exemption under the S.R.O. amounted to a misstatement or false statement which comes within the ambit of section 32(2) for which the period of limitation for taking action is three years from the relevant date. The argument is devoid of any merit because a hare reading of the show‑cause notice, dated 5‑1‑1992 nowhere makes a mention of a misstatement, false statement or any collusion on the part of the petitioner which resulted in short levy by the Customs Authorities. The argument advanced by the learned counsel is misconceived and is, accordingly, rejected.

In view of the above discussion, it is clear that the show‑cause notice, dated 5‑1‑1992 issued by respondent No. 3 is not covered by section 32(2) but is covered by section 32(3) of the Customs Act, 1969 which at the relevant time required the Customs Authorities to issue a show‑cause notice within six months of the relevant date. In the present case, the notice was issued after more than 15 months of the expiry of the relevant date and was accordingly barred by limitation. Accordingly, the petition is allowed and the show‑cause notice, dated 5‑1‑1992 and the Order‑in‑Original, dated 5‑5‑1992 passed by the Assistant Collector Customs, Appraisement VII (respondent No.3) are declared to be without lawful authority and of no legal effect and are accordingly set aside.

The above are the reasons for the short order, dated 13‑9‑2002 allowing the petition.

C.M.A./R‑83/KPetition allowed.